No it isn’t an April Fool’s hoax, another 3% cost will be incurred from the 1st April 2016 on any residential property transaction which is not for their main home.

The idea is to raise additional tax-revenue in an area of housing that the government wants to discourage - investors purchasing properties to then rent out. The government’s main aim is for people to buy homes which they, themselves, will live in.

Practically, this measure is through an additional percentage on the Stamp Duty Land tax for related property transactions, across the whole board of prices including those under £125,000 which currently have no charge.

So, a £125,000 purchase will cost an additional £3750, and a £300,000 one an additional £9,000; serious figures which are going to hit the pockets of the residential property investor.

So here’s 7 factors to be aware of with this:

1. There Will Be a Mad Rush to Complete Deals Before the End of This Month to Save This Cost

Solicitors will be rushed and property prices may be inflated for those with high investor-demand. However, completion must be by that date. Therefore, it is highly unlikely for any new deals to make it through even if instructed today and contracts exchanged soon. Watch out for any fall-out or aborted deals from this.

2. There Are Some Exemptions

Caravans, mobile homes, house boats, and deals under £40k. There’s also major players with 15-plus properties who are excluded; the idea being to encourage serious institutional players. Also excluded, of course, are properties genuinely meant to end up being your main residence as opposed to those buy-to-let or holiday-home investments, with the detail on moving from rented to ownership and an 18-month buffer between properties.

Also affected are those with an existing home abroad and their first UK property purchase; the idea being to capture everyone world-wide purchasing in the UK.

4. Be Careful About Getting Too Clever and Owning Properties in Different Names

Related companies and joint-names get warning bells ringing, and different names of, for example, your partner, may also be open to scrutiny. Definite help is needed with trusted professionals at this point.

5. It Might be Worth Looking at Other Ways to Hold Residential Properties

So, building from scratch will be excluded, or possibly some forms of guaranteed rent scheme or rent-to-rent. On the above point of your own homes being excluded, purchasing for this reason in the first instance and then later re-mortgaging afterwards for buy-to-let purposes may exclude it.

6. It Naturally Makes You Look at Non-Residential Options

Properties abroad away from UK law is one, and commercial business properties another.

7. The Market Should Theoretically Adjust to This 3% Price Change For Investor Demand

So, prices will be dropping anyway as this gets factored into calculations, therefore instead of panicking and even trying to get through before the 31st March, try to wait and see how things pan out.